New Delhi, June 3 -- IIFL Finance Ltd raised $500 million through its inaugural social bond issue on Wednesday, after robust demand enabled it to compress pricing.

The non-banking financial company tightened pricing to 7.6% from an initial guidance of 7.9%, after investor demand exceeded $1.7 billion, according to people familiar with the matter.

Proceeds from IIFL's dollar-denominated transaction will be used to fund the credit requirements of more than 5 million unbanked or underbanked consumers, the people cited above said, requesting anonymity.

At the time of filing, subscription books were still being filled by US investors following earlier rounds of bidding.

The Mumbai-listed lender has $11.3 billion in loan assets under manage...